Anil Jain, General Manager of Jain Irrigation
Photo: Office ET Now
New Delhi: In an exclusive interview with the MD of ET Now-Jain Irrigation, Anil Jain said that the company’s self-sustaining business will become net debt-free in the next 2-3 years. The statement comes after it was announced yesterday that Jain Irrigation’s wholly-owned subsidiary, Jain International, will merge its international irrigation business with Rivulus (backed by Singapore-based Temasek Group) into a merged entity for solutions. of micro-irrigation.
This will create the second largest irrigation and climate company with combined revenue of $750 million. The transaction is expected to close in early 2023. Temasek was an investor in Jain Irrigation from 2011 to 2012. The company is also in talks with Temasek for its Indian climate technology solutions business.
More importantly, the combined debt will fall by 46% to Rs 3,300 crore. The Indian stand-alone company’s debt is to be repaid through internal accruals. $300 million of contingent liabilities will also be removed from the balance sheet.
The transaction was completed at a calculated value of 11.7 times for the new entity. Jain International will hold a 22% stake in the new company, while the remaining 78% will be held by Rivilus.
The total deal of this entity is set at Rs 4,200 crore, where the debt repayment of Rs 2,700 crore will be there while the rest of Rs 1,300 crore will be in cash for Jain International. The Indian self-parent will receive Rs 200 crore in the form of receivables.
Jain Irrigation will also be able to release its corporate guarantee given by Jain Irrigation of Rs 2,275 cr to bondholders and IIB lenders. The Indian parent company will have a 10-year long-term supply agreement with the merged entity, which will also continue to use and promote leading JAIN brands in the markets. In the new entity, Jain Irrigation will continue to have board seats and voting rights as a strategic investor.
The stock has already risen 30% in the past two sessions. However, the stock is down more than 80% since hitting its all time high in 2010. Rising debt, corporate governance issues and delays in government orders have impacted this title.